When Tesla (TSLA) reports earnings on Wednesday, all eyes won't be on whether Elon Musk comments on his bid for Twitter on the earnings call (or if he is even on the call) but rather how big of a hit the company will experience due to a Shanghai factory production shutdown.
"With Berlin and Austin key factories now online and producing Model Y's in a quickly ramping pace, the main question for tomorrow is just how bad the China production issues are and what that means for deliveries in 2Q and the rest of the year," said Wedbush analyst Dan Ives.
Ives thinks the hit to Tesla could be sizable.
"We estimate that roughly 50k units are now reduced for the June quarter for starters given the last three weeks of shutdown and depending on how aggressively Tesla can ramp back production could be impacted further over the next month. Musk & Co. are in a tough spot, as there are so many variables around 2Q China production that will certainly weigh on guidance for the rest of the year and thus has been a clear overhang on the stock over the past month," the closely watched analyst said.
Tesla is expected by Wall Street to deliver $17.76 billion in sales for the quarter and earnings of $2.26 a share. A year ago, Tesla produced sales of $10.4 billion and earnings of $0.93.
The Street is modeling for Tesla's earnings to reach $10.64 in 2022, a number that could be at risk given the China factory shutdown.
Indeed Tesla investors are entering the quarter nervously.
Shares of the EV maker are down about 4% since April 4.
The stock has come under increased selling pressure as Musk put in a $43 billion bid last week to buy Twitter.
But Wall Street is generally staying upbeat on Tesla despite the array of distractions for Tesla. Ives still rates the stock at an outperform with a $1,400 price target.
"We remain bullish on the Tesla story as the company navigates near-term production issues with strong consumer EV demand our focus for 2022 and beyond," Ives said.